Wolves of Wall Street: poised to gobble up U.S. farmland?

Enthusiasm for agriculture as an investment “borders on speculative mania,” and “the wolves of Wall Street are eyeing millions of acres of U.S. farmland that will soon come up for sale, much of which has been in the hands of family farmers for generations.”

That’s from a report by the Oakland Institute, Down on the Farm — Wall Street: America’s New Farmer.

Institutional investors — including hedge funds, private equity, pension funds, and university endowments — “have trained their sights on America's agricultural infrastructure," says Lukas Ross, an Oakland Institute Fellow and author of the report[3]. "If they succeed in consolidating control over our land and infrastructure, this new class of land barons could imperil our nation's food supply."

Investors are increasingly interested in capitalizing on the run-up in the value of private equity assets, the report says. So they're lining up to purchase some 400 million acres that will become available over the next two decades. That's half of all U.S. farmland.

One industry leader estimates that $10 billion in institutional capital is looking for access to U.S. farmland, but that number could easily rise as investors seek to ride out uncertain financial times by placing their money in the perceived safety of agriculture.

“In the next 20 years,” the report says, “as the U.S. experiences an unprecedented crisis of retiring farmers, there will be ample opportunity” for acquisition by investors to expand their holdings, as an estimated 400 million acres change generational hands.”

Of the estimated $1.8 trillion worth of farmland across the country, investors believe $300 billion to $500 billion is of “institutional quality” — a combination of factors including size, water access, soil quality, and location.

“This makes domestic farmland a huge and largely untapped asset class,” and “frequently these buyers enter the market with so much capital that their funds are practically limitless compared to the resources of most farmers.

"This is the beginning … of a land rush that could literally change who owns the country and our food and agriculture systems … (creating) a perfect storm of global and national trends that could converge to permanently shift farm ownership from family businesses to institutional investors and other consolidated corporate operations.”

Further contributing to the institutionalization of agriculture are tensions resulting from the use of land to grow crops for biofuels, a higher demand for animal feeds to increase meat production for a growing global middle class, and fewer obstacles to speculation in the agricultural futures market as a result of deregulation.

“When these factors combine to increase crop prices, it sends a powerful price signal to investors of all kinds that farmland itself is a winning investment,” the report says.